Brazil Tractors Market - Industry Analysis & Forecast 2022-2028

MARKET INSIGHTS

Brazil tractors market was estimated to register 44,836 units in 2021, which is expected to reach 62,033 units by 2028 growing at a CAGR of 4.75% during the forecast period (2021-2028). In 2021, the 50-100HP segment accounted for the largest share due to increasing landholding structures in Brazil.

• With approximately 70% share, tractors account for the largest agricultural equipment segment in Brazil in terms of revenue. Brazil is the largest exporter of tractors (by volume) in South America. The number of tractors manufactured in Brazil accounts for over one-third of the total number manufactured in South America.
• The government strategies to enhance the welfare of farmers by converting agriculture into a more viable activity are paving the way for new tractor purchases. The awareness about advanced agricultural equipment to improve per hectare yields is reducing the overall cost of crop production, and the income-centric inclination of farmers is boosting the sale of new tractors in Brazil.
• The increasing penetration and adoption of farm mechanization practices throughout the Brazilian sub-continent have boosted the sale of new tractors. Tractors and agricultural implements driven by tractor spares are the major product categories of the organized agricultural market in Brazil.
• Unlike other emerging regions such as APAC, the Middle East, and Africa, the demand for high HP tractors increased in Latin America. In Brazil, the 50−100 HP tractors segment dominates the market and contributes more than a 44.3% share of the overall market, followed by the 151−250 HP segment, which accounts for 20.5% in 2021. The other segments contribute the remaining 35.2% share.

Brazil Economy Overview:

• Smart tractors have the capability to operate innovative machines and collaborate with the latest agriculture application systems and equipment; having said that, the adoption of precision agriculture methods and smart tractors will be responsible for increasing the total yield
• Farmers can achieve maximum efficiency for every outcome in the field with precision agriculture solutions, including innovations like the automated placement of the proper seed and nutrition at the right location and time. Precision agriculture would imply efficient utilization of funds, resources, and time.
• From the required increase in production and yield – a mere 20% can be achieved by expanding the arable land. The remaining 80% will have to be attained by increasing the cropping intensity using precision agriculture and innovative methods to improve the yield per hectare. Precision farming systems and services include farm labor management, irrigation management, yield monitoring, field mapping, crop scouting, inventory management, financial management, and weather forecasting.
• Across industries, agriculture is the most susceptible to volatility in production due to adverse weather conditions. The need to adopt precision farming techniques with smart tractors is high to effectively mitigate the challenges against food production and increase the net income of farmers alongside.

Investment & Regulatory Outlook in Brazil

• Economic growth is expected to improve in 2022 due to low inflation, low-interest rates, and a reform package that the government is pushing through to regain competitiveness. Against this backdrop, the local F&A sector continues to lead the growth and exports, supported by record production in several key commodities. However, the meat scandal that weighed heavily on the beef sector in 2020 reminds us of the hidden risks and the need for improved corporate governance.
• After years of lower farm income and financial distress led by over-indebtedness, farmland opportunities abound in the country. However, the Brazilian government eased FDI norms, positively impacting the agriculture industry.
• The local sugar and ethanol industries continue to undergo a turnaround process following massive defaults seen in the previous years.M&A activities across the F&A value chain are likely to grow as strategic players, private equity investors, and institutional investors bid for assets across the whole value chain.
• Many sectors are primed to grow and witness more consolidation ahead, including input distribution, grain origination, and trading, and animal protein – including aquaculture, fruit production, and forestry, resulting in growth in Agri production which supports the demand for tractors in the Brazilain market.
• The Countries such as Netherlands, US & France are the major investors in the Brazilian market, accounting for 51.6% of overall investment in 2019.

The 50-100 HP Segment Generated Highest Sales  

Brazil tractors in the 50−100 HP power range accounted for the highest market share. Medium-scale farmers in almost all regions within the country rely on tractors in the power range of 50−100 HP. The increased use of tractors in the power range of 50−100 HP is due to their ability to effectively carry out all tasks in the field, including soil preparation, irrigation, weeding, harvesting, and haulage. Farmers use these tractors to carry equipment and crops from fields to the marketplace. These tractors have the power to perform the required farming tasks and are used in several other ways, such as operating generators for irrigation and running both companies and domestically made harvesters and threshers. The labor shortage and reducing agriculture production costs have triggered the demand for this segment in the Brazilian market.

Brazil Agriculture Tractor Market & Segmentation by Region Type (Volume in Units)

The southeastern region has the highest demand for tractors in Brazil. Rio de Janeiro and Sao Paulo have the highest percentage of hand-operated machines and tools in agriculture.

The combined penetration of mechanized implements and tractors in the Southeast region is close to 32%, with manual tools and animal-driven tools comprising 38% and 30%, respectively.

The region's major crops are rice and soybean, and these crops constitute 28% and 40%, respectively, of the total crop production. The Southeast region is one of the leading regions with a high penetration of compact tractors. The hilly and plateau terrain of the region has driven the adoption of smaller tractors.

50-100 HP range tractors accounted for the largest share in the Southeastern region due to their compact size and flexible operational capabilities. The demand for 50-100 HP is expected to grow significantly during the forecast period.

2WD Tractors Dominated The Brazilan Market  

The two-wheel-drive tractors are agricultural machines with a single axle used to hoist equipment such as cultivators, rotavators, and seeders. These are typically utilized on farms where the tractor's pulling strength is unimportant, and the machine's operational ability is the priority.

2WD tractors have been a conventional choice in Brazil for farmers. Popular brands including Kubota, John Deere, New Holland, and TAFE are the preferred choices among farmers in the 2WD segment in Brazil. Older farmers majorly use 2WD tractors as they are skeptical about using new machines and are more comfortable with traditional 2WD tractors than 4WD tractors. The major plus point of 2WD tractors is the ease of driving and maneuverability during light loads and plain fields.

Brazil has many medium-scale farmers with an average farm size of 60.5 ha/farm. For this reason, farmers prefer to own large and powerful machines. In Brazil, power paddles are attached to two-wheeled tractors for wheat plantations.

INCREASING FOCUS ON SMART & AUTONOMOUS TRACTORS

Self-Driving Tractors

In early 2018, New Holland announced a self-driving tractor. With self-driving and GPS-enabled tractors, farmers can program routes to help them navigate their way across the field. The farmer drives hands-free while navigating more precisely and can manage other aspects of their business from the tractor's cab.

GPS Technology

John Deere installed GPS technology in its tractors in 2001. GPS technology on tractors and other equipment helps farmers with field mapping, soil sampling, and crop scouting. It also allows them to work during low visibility field conditions such as rain, dust, and fog and maximize efficiency.

Brazil tractors market is supported by government subsidies, credit support, & investment by international manufacturers

The government has supported sustaining and empowering farmers through policies such as family farming incentives. The Government of Brazil has launched several policies and missions targeted at helping farmers by providing them with financial assistance, better infrastructure, competitive crop prices, loan waivers, and subsidies. The investment in the agriculture machinery industry has significance in driving the sale of tractors in the region. The presence of internationally established brands instills a factor of confidence and trust among customers. However, the region in recent years has witnessed certain soc-pol-economic turmoil in major Latin American countries. 

Brazil tractors market is facing challenges such as Looming unfavorable weather conditions, increasing usage of used or rental tractors & fluctuating commodity and fertilizer prices

The year 2020 remained partially dry in Brazil's central crop belt. The major crop-producing states of the country received below or near average rainfall. The states of Cordoba, Santa Fe, and Buenos Aires had precipitation levels below average by 46%, 40%, and 9%, respectively. Farmers that don't have enough capital to spend on machinery are considering low-cost alternatives such as used tractors on the market rather than buying new tractors. They also find it more difficult to obtain loans for new equipment due to the tight credit conditions. Declining commodities prices lead to low purchases from farmers, thereby hitting their incomes and ability to invest in tractors or related agricultural machinery. The declining prices of agricultural commodities coupled with declining or weakening currency rates result in farmers being less willing to invest in new machinery, especially tractors.                                                                 

CROPPING INTENSITY & LANDHOLDING STRUCTURES

• The cropping intensity, which includes the number of different crops grown in the same field in a single year, constitutes a vital source of growth for the sector and farmers and their households. Regarding cropping intensity, some Brazilian states show an inverse relation between land under cultivation and the number of different crops cropped from the same land in a year. The involvement of family members in small and marginal farming households results in lower labor and operating costs than that of large-scale farmers.
• Marginal and small-scale farmers present high cropping intensity as they have small pieces of land. Small land areas must be cultivated with several crops to produce high annual output. Small and marginal farms are family-run and employ family members for manual labor with less agricultural equipment, thus reducing the overall cost of labor than large-scale farms. John Deere has acquired the company Beer Flag Robotics to gain access to the farm equipment market in the advanced equipment market and expand to other countries, enhancing production capabilities in Germany.

Major Labor Shortage in Agriculture Sector

The percentage of the population engaged as a workforce in the agriculture sector reduced from over 59% in 1991 to 45% in 2020. The percentage of the total working population actively engaged in agriculture is expected to reduce to 40% by 2023 and a further decline to less than 30% by 2030.

The factors leading to reducing the percentage of the total workforce engaged in agriculture are income and growth opportunities in the non-agricultural sector, lower wages, and extreme work conditions in fields. As the percentage of working people is declining, it can lead to a drastic level of a labor shortage on farms. Also, the upcoming trend of declining labor in farms is posing a looming threat to the productivity of the agriculture sector, farm incomes, and the farmer's standard of living.

VENDOR LANDSCAPE

• The key players in the Brazil agriculture tractor market are AGCO, CNH Industrial, John Deere, TAFE, and Kubota.

• In terms of units sold, AGCO and CNH Industrial were the two largest tractor manufacturers in 2020. AGCO was the highest-selling tractor in the country, with more than 30% of the overall tractors sold in 2020.
• In terms of value, AGCO, CNH, and John Deere dominated the Brazilian tractor market with a collective market share of over 70%. The threat of rivalry is high in the Brazilian agricultural tractor market; these players thrive on innovation in the tractor market. They are increasingly investing in developing advanced agriculture tractor technology for precision farming and machine automation.

WHY SHOULD YOU BUY THIS REPORT?

This report is among the few in the market that offers an outlook and opportunity analysis forecast in terms of:

• Market Size & Forecast Volume (Units) 2019-2028
• Segmentation by Horsepower
• Segmentation by Wheel-Drive
• Segmentation by Zones (Federal States)
• Production and trade values
• Major current & upcoming projects & investments
• Gain competitive intelligence about the economic scenario, advantages in Germany, market dynamics, and market share
• Latest & innovative technologies
• Import & Export analysis
• COVID-19 impact analysis of the market
• Company Profile of major and other prominent vendors
• Market share of major vendors